Tuesday, August 28, 2012

MATOC Industry Day: More Blind Date than Match Making

I attended the $7.1B Army PPA MATOC industry day, hosted at Redstone Arsenal by the Huntsville Corps of Engineers along with about 600 interested and, in some cases, anxious parties. When I wrote about this last week, I emphasized the opportunity for match making. The reality did not meet the opportunity. The briefings were as informative as contracting specialist can make them and many questions were answered. Many were not. The desire for a number of the industry attendees was to find team partners, but the Corps folks hadn’t figured that out. All name tags were just generic “VISITOR” badges and all questions had to submitted on cards to preclude advertisement in the disguise of a question. Still, at the end of the day, the Corps did offer to distribute the attendee listing via Projnet. They are getting there.

The bottomline is that this MATOC is employing a tried and true process to do something that has not really been done before. The Corps and the Army Energy Initiative Task Force are finding their way, making sure they are as open as they can be and still maintain consistency with the Federal Acquisition Regulations (FARs). The FARs are not exactly the most flexible set of rules around, but they are the most exacting. Every compliant proposal will be awarded, according to the folks there. The challenge will be in being compliant. The most demanding requirement, for past performance, will make or break proposals.

For the four technologies specified (solar (2MW), wind, biomass, geothermal (4MW)), proposers for any of the techs would have to demonstrate that they had designed, financed, built and operated that technology in three or more commercial projects in the United States in the same general application as in the proposed project, and that it has been in operation in each such commercial project for at least three years. If you do not have the requisite past performance, you can’t propose for that technology. Proposers may be certified in one technology, but not in another. There will be no communication with the source selection board, so get it right the first time.

The other bone of contention was over the requirement for a price for a given technology. John Lushetsky of the AEITF gave me a good explanation of the FAR requirements for a price in a MATOC, but when one thinks about a number that will serve as the ceiling for future pricing on task orders with the potential of a 30 year contract, one can become nervous and giggly. Too low and you will never make a cent; too high and you are non-compliant. My guess is that it will be difficult to disqualify a proposer on price, but if you provide the price per kilowatt-hour for your tech at 4:00 p.m. on August 4th in downtown L.A., you should not be far off.

Several attendees asked questions regarding specifics of the eventual task orders that will come out. The Corps team flatly refused to discuss TOs. The AEITF is working to develop those, but gave no indications when the first TOs would be released. The AEITF will be coordinating NEPA, DOD Energy Clearing House and other administrative tasks in order to relieve industry of those burdens. The challenge for the AEITF and Industry will be the pace at which those TOs are released. Too fast and business development budget can be overwhelmed. Too slow and potential bidders will have to move on to other projects. What would be useful is some sort of indication of the types of technology being considered by installation to allow for initial research. This would have to be consistent with the requirements of the FARs.

Although not a major topic of discussion, interaction with the utilities did come up. The Corps representatives allowed as that they could use the provision of USC 591 to “circumvent” the utilities if they are “unwilling or unable to meet unusual standards of service reliability that are necessary for purposes of national defense”. The SecDef can authorize “purchasing electricity from any provider if the Secretary finds that the utility having the applicable state-approved franchise (or other service authorization)” won’t play ball. Of course if the local utility feels cut out of the process and subject to lost revenues, then interconnection and wheeling charges could be astronomical. Those charges are not to be included in any pricing.

As regards Energy Security, according to the RFP, “grid isolation technology will likely be required as defined in the Task Order so that a continuously operated plant will self-isolate and remain functional upon external grid power failure. The grid isolation effort will be included as an optional price in the Task Order”. When asked about energy storage, the Corps panel said that would take it if it were free, but they were not interested in paying for it. An intermittent technology without storage provides no energy security.

This is not a perfect process, nor will it ever be, but it is an enormous step that will provide an instrument for anyone in DOD to use in order to go after renewable energy. The MATOC is only the license to hunt; the real business is in the task orders to come. In those TOs will be the provisions for energy security and the details necessary to answer all (or most) questions. Get writing! Dan Nolan

UPDATE: The EITF has created a LinkedIn Group to facilitate match making. Check out their Group! Dan Nolan

6 comments:

Makes me wonder about the purpose of this exercise and the energy tech chops of the folks writing these specs: "The Corps panel said that would take [storage] if it were free, but they were not interested in paying for it." Concur with Dan: An intermittent technology without storage provides no energy security.

Your comment that variable generation without storage provides to energy security benefit is incorrect. There are many examples of diesel-renewable hybrid island or microgrids without storage. Whether you need storage, how much, and how it's used depends on the level of penetration within the microgrid. The variable gen does need to be configured appropriately, however.

Dan, Thanks for your dedication to DOD energy and national energy security. I wish there were a thousand of you to further energy security. Hopefully, the AEITF will be just what we need to facilitate progress. I have followed your blog for the past year. Very insightful. And thank you for your service to the nation when in uniform. Currently, I am an ILE student at Ft. Lee. I am an Army ORSA by training, but my passion has been the environment ever since my time at USMA prep when i witnessed the unfortunate pollution in lots of New Jersey and did not want the same thing to happen to my beloved Oklahoma. Having recently left the Naval Postgraduate School, I am impressed with the SecNav's goal for renewable energy. Not sure if they are going to make it, but at least they are willing to fight for it. I would like to get your opinions on the potential for biomass (specifically trash) energy plants at military installations near large cities. I did my thesis on cost estimations for such a plant at Ft. Bliss and noticed that such plants could be possible elsewhere if the local leaders had the foresight of those in El Paso and industry partners could be found. Thanks again for a job Well Done.Sincerely,MAJ TJ Clement

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This blog tracks the energy challenges facing the US Department of Defense in the early 21st century. Drawing from the best thinking inside and outside the Pentagon, it examines problems and identifies possible short, medium and long term solutions in technology and policy.

Andy Bochman runs the DOD Energy Blog and can be reached at andybochman at gmail dot com